Few would disagree that when it comes to life cover, income protection and critical illness cover, declined claims are the biggest cause of damage to consumer trust.
Work to cut declined claims has focussed on the two main causes of these – non-disclosure and clients not understanding what’s covered and what’s not.
The industry has tackled the issue of nondisclosure by using feedback from the Financial Ombudsman Service concerning the types of questions that cause problems and developing guidelines for clearer application forms and processes.
The new statement of best practice for CI cover requires all insurers to use a standard description of how products work. This means consumers will see this time and again so the message gets across.
The statement also requires insurers to use more descriptive headings for each illness – for example, ‘cancer – excluding less advanced cases’ – so consumers get the correct impression of what each illness definition covers.
Advisers have played a key role in driving down the number of declined claims. For example, pretty much all advisers now know the importance of full disclosure and ensuring their clients answer all application questions fully and to the best of their know-ledge. It’s in the industry’s interests to make this work to win back consumer trust.
The industry has worked hard on this so it is pleasing to see the results starting to come through, evidenced by fewer cases being re-ferred to the FOS.
The number of CI cover complaints to the FOS – almost all concerning declined claims – was down to only 680 in the year to March 31 compared with 799 the previous year. Similarly, income protection complaints were down from 1,103 to 891.
These figures need to be seen in context. The numbers of CI and IP policies are likely to have increased by almost 600,000 last year so individual CI and IP products together protect an estimated 14 million people.
Despite this good work by the industry, there is no room for complacency. For example, we need to do more work in the area of claims declined for non-disclosure.
But for now, let’s enjoy this moment of success and reflect on the good work that everyone in the industry has done for the benefit of our customers. It’s a great feeling, knowing that when the worst happens consumers can increasingly rely on this industry to pay their protection claims first time, every time. Let’s keep it that way.